TOKYO,- Asian stocks sagged on Thursday, tracking declines on Wall Street, after the US Federal Reserve projected higher interest rates for a longer period.
US Treasury yields remained depressed and the curve deeply inverted as traders continued to fret that tighter policy will trigger a recession. The US dollar languished near a six-month low against major peers.
Crude oil, though, continued to firm after bouncing off last week’s nearly one-year low, with OPEC and the IEA forecasting a recovery in demand next year as China’s economy reopens.
Japan’s Nikkei eased 0.17 percent, while South Korea’s Kospi dropped 0.92 percent and Australia’s stock benchmark fell 0.4 percent.
Hong Kong’s Hang Seng tumbled 1.71 percent and mainland Chinese blue chips declined 0.51 percent.
MSCI’s broadest index of Asia-Pacific shares slumped 0.91 percent, after climbing as high as 160.37 in the previous session for the first time since late August.
Overnight, the US S&P 500 lost 0.61 percent, although e-Mini futures pointed to a slight 0.06 percent bounce for Thursday’s reopen.
Fed Chair Jerome Powell said on Wednesday that the central bank will deliver more rate hikes next year even as the economy slips towards a possible recession, arguing that a higher cost would be paid if the US central bank does not get a firmer grip on inflation.
The comments followed the Fed’s decision to raise the benchmark rate by an as-expected half a percentage point – down from recent 75 basis point increases – but projected a terminal rate above 5 percent, a level not seen since a steep economic downturn in 2007. — Reuters
